Are Prenuptial Agreements Enforceable?

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A prenuptial agreement, also called a “pre-nup”, are commonly enforceable. Although, spouses need to side step the issues which could void a pre-nup.

Pre-nups are used to decide how assets, debts, and spousal support will generally be handled in the case of a divorce. Pre-nups are common in second marriages or when the spouses have sizeable separate assets.

Separate property is a label placed on assets or debts which are not divided during a divorce. Community property is divided equally during a divorce. Without a pre-nup, separate assets could be considered community property. Separate assets are not divided, community assets are divided in half. It should be clear why a spouse with significant separate assets may look for a prenuptial agreement before getting married.

Prenuptial Agreements are Enforceable

Until the late 60’s most states would not enforce prenuptial agreements. The courts opined, such agreements attacked the core of a marriage. However, in the mid 70’s state courts started to hold prenuptial agreements to be enforceable. By the late 80’s most states adopted the

Uniform Premarital Agreements Act (UPAA). Under the UPAA, parties to a prenuptial agreement are allowed to agree with regard to:

1. Assigning rights to separate property and separate debts;

2. Any rights to sell or encumber separate property;

3. The disposition of property upon separation, or divorce.

4. Spousal support

When are Pre-Nups Not Enforced

Prenuptial agreements are essentially contracts between spouses. Like all contracts, there are times when the court will not honor an agreement. The main reasons for an agreement to void, or voidable, are lack of capacity, duress, unconscionable, and fraud.

Lack of capacity is referring to the ability to understand what is being agreed upon. Is the spouse under the age of 18, or did they sign the agreement will intoxicated? Did the receive advise from an independent attorney? These are common examples of lacking capacity. Spouses need to have full mental capabilities when signing any agreement.

Duress is a legal term meaning to agree under pressure. Signing a contract with the threat of bodily harm is duress. Courts will void a pre-nup agreement if the bride or groom felt pressure to sign two days before the wedding. The embarrassment from cancelling a wedding can be intimidating enough to be considered duress.

Fraud is when the facts relied upon have purposely been manipulated to your detriment. Most fraud issues arise from not knowing of a spouse’s economic situation. The UPAA requires both spouses to receive “fair and reasonable disclosure” of all assets and all financial obligations. Spouses must openly reveal assets, debts and income.

A contract can be considered “unconscionable” if it is too one-sided or unfair. Agreements which appear to have the spouse over a barrel would be suspect. For example, an agreement where a husband making $200,000 a year has his future wife sign an agreement where should is to not work, to stay home with the children, but in the case of divorce would not receive spousal support, or his retirement. This agreement would be unconscionable for the court.

The reasons prenuptial agreements are unenforceable tend to be connected to a lack of open and honest communication. The takeaway is to allow enough time for the agreement to be reviewed, provide full disclosure of assets, and provide and fair and equitable agreement.